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What should I buy in September? Johnson & Johnson JNJ, India Fund IFN, Wipro WIT or Boeing BA? September 7, 2007

Posted by deminvest in BA, Boeing, investment, JNJ, Jonson & Johnson, Wipro.
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My strategy suggests to buy $1000 worth of stock every month, no matter how unfit for new investments the month could be. This September looks very unfit by I have to make a…

difficult choice: Difficult Choice

 

I’d definitely like to buy:

  1. Johnson & Johnson because it is defensive: its health care products are bought even if the economy slows. Also JNJ has excellent numbers:
    • It is cheap: Forward P/E 14,
    • It is growing: Qtrly Revenue Growth (yoy) 13.20%, Qtrly Earnings Growth (yoy):9.30%
    • It hardly has debts
    • Last but not least It yields juicy 2.7% dividends.
  2. India Fund because I still think India has great opportunities and this closed end fund is trading at a favourable 10% discount. I called this fund a rip off when is used to trade at 30% premium, but now it is undervalued. Also IFN owns shares of many excellent Indian companies that are not available for Westner investors.
  3. Wipro is a fast growing Indian Software consulting company. I already decided I wanted to buy Wipro. Now WIT has far better numbers than it used to when I wrote the post linked above. Forward P/E : 20.46 is low for a company growing Qtrly Revenue Growth (yoy):33.60% and Qtrly Earnings Growth (yoy):15.70%. It has 0 debts and 1B cash. I like Wipro very much now.
  4. Boeing is a very healthy company. It is growing fast as global airline traffic soars. Their only competitor, Airbus, is troubled. BA should assure a great protection against risks of economic slowdown: their airplane production is fully booked for the next five years. BA is fairly cheap (Forward P/E :15.29), is nearly debt free, gives out some modest dividends ( yield 1.5%) and is a safe harbour for investors worried of the sbprime turmoil: Boeing products are already sold for the next 5 years. BA is also showing good revenue growth: (yoy) 13.60%, which is very good for a company that needs time to build each airplane and time to expand its factories.

Which should I chose?

Any help is welcome!

Comments»

1. Eric Nagel - September 7, 2007

JNJ has a strong recommendation, 20% off its analyst target, and the fool.com CAPS system has the Outperforms well outnumbering the Underperforms (like 20:1) with a CAPS rating of 4. That’s the one I’d choose.

2. deminvest - September 9, 2007

I’ll follow your advice Eric.
JNJ is a great stock and it really is time to play safe.

I also want to be optimistic and I want to give markets a pledge of optimism. I just placed an order to buy at any price 16 JNJ shares. Let the force be with me! (or with us if you’re buying it too🙂 )

3. TanZ - September 10, 2007

What do you think about IBN ( ICICI bank) ? It is a fast growing back in India with very little or indirect exposure to sub-prime mess. WSJ had an article about them.

4. deminvest - September 10, 2007

Tanz I like IBN.

It looks like a good stock:
Forward P/E 16,
revenue and earning growing 25%.

Also Indian banks are much better than Chinese banks, that lend money to friends of the Chinese government.

Still I would consider IBN risky in this moments of financial turmoil:
1) Nobody can know exactly how exposed to US subprimes this bank is
2) There is a great crisis of trust among banks themselves all over the World. Banks lend each other money at much higher raters because they luck trust in each other. If banker don’t trust each other, why should we, who know so little, trust them?
3) real estate markets are shaking everywhere. If the price of Indian houses falls, Indian lenders may decide it is not worth the sacrifice of paying high mortgages for houses that are worth 30% less than they are paying for every month.
4) In the unlikely event of a global recession, banks are hit first.
5) IBN has a current P/E of 27. It is OK if earning continue to grow, but if they are hit by what I wrote above, it may become extremely expensive.

I will conwsider IBN in late October after the cluods have gone away. I will pay them more than now, maybe 10% more, but if I buy now and things go wrong, I may lose 60% easily on ICICI.

I stick with JNJ for September.

5. TanZ - September 10, 2007

Eric

I will probably stick with your advice. Get some JNJ. Thanks
Tan

6. Jon - September 11, 2007

I just bought some JNJ for my IRA a little while ago!🙂

7. deminvest - September 12, 2007

I bought 16 of them yesterday. Let the force be with us!

8. Got JNJ last month. Now I’ll chose India Fund IFN over Wipro WIT and Boeing BA « Democratic Investments by the people for the people - October 25, 2007

[…] of its good numbers, because it could be a safe heaven in  times of markets turmoil and because I was convinced by other investor that it was the right choice. Now I have to make my October investment […]


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